Dispatches from IFE

No escape from chocolate price rises

By Sarah Hills

- Last updated on GMT

Related tags: Cocoa prices, Chocolate, Hot chocolate

Small ingredients companies supplying chocolate and other products are expected to benefit from the cost-cutting tactics of their larger counterparts which now find themselves under threat, according to a co-founder of HB Ingredients.

Tony Mycock, of the UK chocolate supplier HB Ingredients, told ConfectioneryNews.com that the industry currently faced a number of challenges including rising cocoa prices, despite chocolate being relatively resilient to recession.

However, Mycock added: “One of the good things is that the larger companies that have grown by under-cutting prices and reducing margins are the ones under threat and that will benefit the small producers and distributors.”

He said that HB Ingredients’ prices were increasing – in some cases by as much as 20 per cent – predominantly because of the weak sterling as it imports a lot of products from the EU. Also cocoa prices crashed through the £2,000 (€2133) a tonne barrier earlier this year.

At the same time he said some manufacturers were trying to cut their ingredient costs by maybe switching back from chocolate to cocoa powder.

Mycock said: “It is a very challenging but at the end of the day we are in business to make a profit and have to continue to do so for us to be there in five or 10 years time. So we have to pass these increases on to the market place.”

HB Ingredients, which saw turnover in excess of £5m in 2008, was among the exhibitors at the IFE09 (the International Food and Drink Event) in London this week,

The company expects the impact of the weakness of Sterling and the higher cocoa market to come through in the second half of 2009.

It states on its website that prices for Callebaut, Cacao Barry, Carma & Belcolade chocolate products will increase by around 20 percent from July 1st, 2009.

However, it adds: “We will be increasing stock levels as far as possible in order that we can help you (its customers) stock build before the price increase applies.”

It supplies chocolate, fondants and sugar ingredients to the bakery and confectionery sectors and claims to be the largest independent chocolate supplier in the UK.

However, Mycock said they were looking at opportunities to expand into Ireland and other countries.

Cocoa prices

May cocoa futures on London's LIFFE exchange reached £2,005 (€2138) a tonne in January which was close to the record high prices of $3000 (€2,317) a tonne achieved on the New York Futures in June last year.

The surge in costs for cocoa was expected to put further pressure on chocolate makers to pass price rises onto their customers.

Bullish factors that contributed to this price hike included a rise in US cocoa bean processing in the last quarter of 2008 and a massive drop in cocoa deliveries - by more than 30 per cent - to Ivory Coast ports between the beginning of October and January 11. December is usually the peak of the harvesting season.

Related topics: Markets, Chocolate, Ingredients

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